Economy of Turkmenistan

The budget-making process and its implementation go according to the Law “On Budget System”. The law fixes legal foundations of organizing management and operating budget system, regulates interrelations between budgets of all levels. The government of Turkmenistan discusses the state budget draft and submits it to the President of Turkmenistan. Prior to one month of the beginning of the financial year the President of Turkmenistan submits to the Assembly of Turkmenistan (Mejlis) the state budget draft for consideration and adoption.

Budget statistics are unreliable because the government spends large amounts of extra-budgetary funds.[9] In 2012, it is estimated that the budget expenditures are US$26.9 billion, and revenues are US$26.4 billion, creating a slight deficit. Ministry of Finance is responsible for state finances.

In the post-Soviet era, Turkmenistan’s industrial sector has been dominated increasingly by the fuel and cotton processing industries to the detriment of light industry.[9] Between 1991 and 2004, some 14 new cotton-processing plants were opened, sharply increasing the capability of processing domestically produced cotton.[9] The construction industry depends mainly on government building projects because construction of private housing is a low priority.[9]

Gas

Turkmenistan's major gas deposits were discovered in its central and eastern areas in the 1940s and '50s, and in the 1980s the republic became the second largest producer of gas in the Soviet Union, behind the Russian SFSR. During the Soviet era gas was exported mainly to other Soviet republics, as Turkmenistan steadily increased delivery from about 9.2 million m³ in 1940 to about 234 million m³ in 1960 and about 51 billion m³ in 1975. This export was under centralised control, and most of the export revenue was absorbed into the Soviet central budget.[13]

This changed in 1991, when Turkmenistan gained independence and established full control over gas export and export revenues. However, Soviet-era pipelines dictate that much of the gas goes to the Caucasus, Russia and Ukraine. In the 1990s many of Turkmenistan's gas customers in the CIS failed to pay on time or negotiated barter deals. In the mid-1990s Turkmenistan stopped delivering gas to some CIS members, citing failure to pay and unprofitable barter deals. At the same time, the government tried to attract investments in building gas pipelines via Iran to Turkey and Western Europe via Afghanistan to Pakistan. Neither deal went through due to an unfavourable regional security environment and high costs; inflation and the budget deficit rose but privatisation was resisted. In the late 1990s the government renegotiated its export and price arrangements with Gazprom and renewed deliveries to Georgia, Ukraine, and some other countries.[13] It also opened its first pipeline not to pass through Russia, the Korpezhe-Kurt Kui Pipeline.

Countries by natural gas proven reserves (2014), based on data from The World Factbook

The figures in the table below are taken from BP Statistical Review.[14] The unit is billion cubic meters (bcm) per year. It lists gas production, consumption, exports as total and also divided into countries. One observes that the production and exports peaked in 2008 and dramatically decreased in 2009. This is due an explosion that occurred in the Central Asia–Center gas pipeline system in April 2009 for which Turkmenistan blamed Gazprom.[15] Russia later restricted its imports to only around 10 bcm, and then 5 bcm.[16] Production and exports started increasing again from 2010 owing to the opening of the Central Asia–China gas pipeline. Exports to Russia ceased in late 2015. Supplies to Iran were cancelled in early 2017, with Ashgabat claiming Tehran owed some $1.8 billion for supplies delivered nearly 10 years before.[17]

Year	Production	Consumption	Exports	Exports to Russia	Exports to China	Exports to Iran
2005	57	16.1	40.9	35.1	0	5.8
2008	66.1	20.5	45.6	39.1	0	6.5
2009	36.4	19.9	16.7	10.7	0	5.8
2010	42.4	22.6	19.7	9.7	3.5	6.5
2011	59.5	25.0	34.5	10.1	14.3	10.2
2012	62.3	23.3	41.1	9.9	21.3	9.0
2013	62.3	22.3	40.1	9.9	24.4	4.7

In the early 2000s, the contribution of Turkmenistan’s state-run agriculture sector to gross domestic product increased under close state supervision.[9] As during the Soviet era, cotton is the dominant agricultural commodity because it is an export staple.[9] However, in recent years state policy makers have increased the range of crops with the aim of making Turkmenistan self-sufficient in food.[9] In the post-Soviet era, the area planted to grains (mainly wheat) has nearly tripled.[9] However, most agricultural land is of poor quality and requires irrigation.[9] Turkmenistan’s irrigation infrastructure and water-use policies have not responded efficiently to this need.[9] Irrigation now depends mainly on the decrepit karakum Canal, which carries water across Turkmenistan from the Amu Darya.[9] The Dostluk dam, opened at Serakhs on the Iranian border in 2005, has increased available irrigation water and improved efficiency.[9] Plans call for a similar dam on the Atrek River west of Ashgabat.[9] Private farmers grow most of Turkmenistan’s fruits and vegetables (chiefly tomatoes, watermelons, grapes, and onions), but all production phases of the main cash crops—grain and cotton—remain under state control.[9] In 2006 grain crop failures led to steadily increasing bread lines and reinstatement of a ration system in most regions.[9] At the root of those failures was a culture of falsifying output figures together with poor administration of the sector.[9] In 2018, independent media reported food shortages in the country, with hundreds of people queuing for hours to buy bread and flour.[24]

Turkmenistan produced in 2018:

• 1.0 million tons of wheat;
• 618 thousand tons of cotton (14th largest world producer);
• 350 thousand tons of tomato;
• 293 thousand tons of potato;
• 249 thousand tons of watermelon;
• 243 thousand tons of sugar beet;
• 239 thousand tons of grape;
• 130 thousand tons of rice;
• 87 thousand tons of onion;
• 71 thousand tons of cabbage;
• 70 thousand tons of carrot;
• 63 thousand tons of apple;
• 63 thousand tons of vegetable;

In addition to smaller productions of other agricultural products, like apricot (34 thousand tons), plum (33 thousand tons) and peach (29 thousand tons). [25]

Turkmen exports in 2006

In 2016, Turkmenistan exported $6.987 billion in goods making it the 100th largest export economy in the world. The top exports are gas, crude oil, petrochemicals, textiles and cotton fiber. Most of these exports will end up in China 70%, Turkey 5.3%, Italy 5.3%, Afghanistan 4.5%, Russia 4.1%.[26]

Also in that year Turkmenistan imported $5.001 billion in goods resulting it being the 121th largest importer in the world. This is $1.986 billion less in imports compared to exports meaning the country has a positive trade balance of $1.986 billion. Its top imports are machinery and equipment, chemicals, foodstuffs. The top origins of imports are Turkey 26.4%, Russia 10.5%, Japan 8.6%, Germany 8.2%, South Korea 7.8%, China 7.2%, Italy 5.2%.[26]

Recent statistics are not available on Turkmenistan’s labor force.[9] In 2004 the labor force was estimated to include more than 2.3 million workers, 48.2 percent of whom worked in agriculture, 37.8 percent in services, and 14 percent in industry and construction.[9] Because the state dominates the economy, an estimated 90 percent of workers are in effect state employees.[9] Unemployment statistics are not available because unemployment does not exist officially.[9] It is believed that downsizing the government workforce, which began in 2003, increased unemployment in subsequent years.[9] However, it is estimated that the unemployment rate is 11% as of a 2014 estimate.[26]

The average monthly salary in Turkmenistan in 2007 was 507 TMT (178 USD) and the same indicator in 2012 was 943 TMT (331 USD).[27] This is equivalent to 86% increase. This dramatic increase is mainly due to the yearly increase of 10% of the state employer salaries by the Government of Turkmenistan.

By 1999, privatization in trade, catering, consumer services was fully completed. Availability of adequate legal base, opening of credit lines, including the foreign ones, simplified the procedure of private enterprises opening and licensing, led to enlargement of the sphere of entrepreneurship. The private sector dominates in agriculture (60%), trade (70%) and transport (56%). Turkmenistan plans to privatize several state companies during 2013-2016. [28]

The following table shows the main economic indicators in 1993–2017.[29]

Household income or consumption by percentage share:

• lowest 10%: 2.6%
• highest 10%: 31.7% (1998)

Industrial production growth rate: official government estimate: 22% (2003 est.)

Electricity:

• production: 15.02 TWh (2009)
• consumption: 11.22 TWh (2009)
• exports: 1.56 TWh (2009)
• imports: 0 kWh (2002)

Electricity - production by source:

• fossil fuel: 99.9%
• hydro: 0.1%
• nuclear: 0%
• other: 0% (2001)

Exchange rates: Turkmen manats per US$1 – 5,200 (January 2000), 5,350 (January 1999), 4,070 (January 1997), 2,400 (January 1996)

in recent years the unofficial rate has hovered around 24,000 to 25,000 Turkmen manats to the dollar. The official rate has consistently been 5,200 Manat to the dollar.

After denomination of national currency the last official rate is 3.5 manat-1$[30]

• Turkmenistan: Potential 'Super-Giant' Emerges On Energy Scene
• Turkmenistan: The ongoing development of agricultural industry
• Map of the oil and gas infrastructure in Turkmenistan